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What is SaaS? Understanding Software as a Service Trends
1. What is Software as a Service?
Introduction, Trends and Perspectives in Software as a Service
William M. Blake
President, eDocument Sciences, LLC
Phone: (716) 913-6676
e-mail: blake@edocumentsciences.com
www.edocumentsciences.com
2. What is SaaS?
SaaS = Software as a Service
• Deployment/Delivery model
– Hosted and Managed by vendor
– Delivered across the Internet
• Business model
– Usage-based pricing vs. perpetual license model
• Per user per month
• Per transaction
• Per GB of storage per month
3. Definition of SaaS
• Software offered as a service to multiple customers with the
following main characteristics:
• Standardization of software – eventually
customized for specific customers and
markets
• License based on usage – pay-as-you-go
• Service includes maintenance, support
and upgrades
• Data storage at SaaS vendor
• Web-based through Internet browser
5. Benefits of SaaS - Customers
• Lower entry point
– No large up-front investment in
• Software licenses
• IT infrastructure
• Lower operating/maintenance costs
– Fast, easy deployment (Web browser)
– Vendor maintains/upgrades application
– No IT staff necessary to keep running
• Consumption-based expenditure
– Pay As You Go (OpEx vs CapEx)
– Scale up/down as needed
6. Benefits of SaaS - Vendors
• Economies of Scale
– Derived from Multi-tenant architecture
• Better resource utilization
• Simplified maintenance
– Operating costs per customer drop as customer base grows
• Better understanding of usage patterns
– Drive innovation and enhancements
• Faster release cycles keeps up with market/competition
• De-facto access to Global market
7. What makes an application SaaS?
• Network-based access to commercially available software
• Multi-tenancy (one-to-many)
• Payment Model
• Central Application Management
– Software
– Infrastructure
• Control of Upgrade Process
8. SaaS vs. ASP
• ASP: Application Service Provider
– Single-tenant architecture (one customer per instance)
– Multiple instances running (as many as there are clients),
typically hosted by third parties
• Disadvantages
– Significant management overhead
– Difficult maintenance
– No economies of scale
9. SaaS Model
SaaS is different from on-premise software in more ways than one.
11. SaaS Business Model Implications
• New sales & marketing approach
– Greater emphasis on web-centric cycle
• New sales & marketing compensation
• New release cycles and maintenance model
• New deployment/delivery approach
• New/higher expectations on customer service
• Uptime and SLA
• Professional Services
12. Shortcomings of Legacy on-premise Apps
• Deployment Challenges
– 31.1% of SW projects cancelled before completed
– 52.7% of projects cost nearly 190% of original estimates
• Operational Costs
– Maintenance & management costs >10x original license fee
– Escalating hardware & staff support costs
– Over provisioning and under-utilization of SW licenses
• Economic/Budgetary Pressures
– Need to reduce IT costs and increase business benefits
– Need to increase utilization to gain greater ROI
13. Changing Customer Expectations
Old New
• Capital Investment Operating Expense
• Complex, Customize Simple, Utilization
• Reactive Maintenance Proactive Management
• Response Time Ongoing Monitoring
• Customer Support Automated Delivery
• Limited Responsibility Higher Accountability
• Outsourcing Alternatives Out-Tasking Options
Enterprises Seeking to Generate Greater ROI
at Lower TCO.
18. Living in a Hybrid World
• Most enterprises will seek mix of on-premise and
on-demand solutions
• Users prefer choice
• Users seeking on-demand/on-premise integration
• ‘Applets’, Appliances, etc. will permit off-line use and
synchronization